Zara: exploiting adaptation, evolution, and user-feedback in the clothing industry

In the book The Wisdom of Crowds the author talks about a clothing manufacturer in La Coruna, Spain called Zara. Zara has revolutionized the clothing industry. Below I have summarized the “old manufacturing model” (which is how most clothing manufacturers operate) and Zara’s model. Although I am not particularly interested in clothing manufacturing, I do find Zara’s evolutionary, adaptation approach very exciting.

Old Model Zara Model
200-300 different products each year More than 20,000 products each year
Piles of unsold inventory that has to be marked down or shipped off to the outlet stores No overstocking. Unsuccessful designs are whisked off shelves in the space of a week, so the company doesn’t have to discount or slash prices
Design for the future (6-9 months) Design for today (10-15 days)
Quarterly reports on sales Store managers are equipped with handheld devices that are linked directly to the company’s design rooms in Spain, so that managers can make daily reports on what customers are buying, what they’re scorning, and what they’re asking for but not finding
The lag time between designing a dress and getting it in the store and selling it: 6-9 months The lag time between designing a dress and getting it in the store and selling it: 10-15 days
Clothes are manufactured by subcontractors in Asia or Latin America Fabrics are turned into products in-house. The company owns 14 highly automated factories where robots work 24 hours a day stamping, cutting, and dyeing. This gives control over what the company does and doesn’t make
Gamble on 10,000 pairs of those new Capri pants Make a small lot (300-400) to see how they sell. If the product looks like a hit then crank up production
Carry 3 months of inventory Carry 1 month of inventory
High inventory = high cost of clothes Low inventory = low cost of clothes
Continually out of sync with customer demands Quickly adjusts to its customers ever-changing demands

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